The tax year end is now just a couple of weeks away so time is running out to take action if you want to save tax in this tax year. There are still a number of actions that can be taken for your business and for you personally to reduce your tax bill, especially if you are a higher rate tax payer.
Our checklist provides a starting point of some simple options that can be still be implemented.
Tax year ended 5 April 2015
The tax year will close on 5 April 2015. After midnight on this date, opportunities to reduce your tax bill will cease to exist and instead the focus will be on effective tax planning for 2015/2016.
What can be done at these final few weeks to help keep the tax bill as low as possible?
There are a few things to consider and certainly speak to both your accountant and financial adviser in the coming weeks as they can help ensure you have maximised opportunities.
Reducing your business tax
If your business year-end is also 5 April 2015 (or 31 March 2015) then ensure you have been proactive in reducing your business tax.
- Have you purchased any expensive capital items within this tax year? Is there additional equipment you will need in the near future? Carefully consider timing of capital expenditure to reduce taxable profits.
- Have you made any purchases for large overhead items within this tax year? You have less than two weeks to purchase these items to reduce your business profits and get the tax relief in the current tax period.
- Is your directors loan account overdrawn? Tax planning around this may be required.
- Have you and your accountant carefully planned the dividends you can draw from the business or the profit allocation and extraction? Now is the time for any last minute planning of this nature.
- Has your business made any charitable donations where gift aid can be claimed? This is a good way to get some extra tax relief and support your chosen charitable cause?
Reducing your personal tax
There are also ways to reduce the amount of personal tax due this year, primarily by ensuring you make the most of the allowances given to every tax payer by the government. Here are a few to consider:
- Does your spouse or civil partner earn less than you? Perhaps they are a “no or low earner”. There could be scope to transfer some income yielding savings or investments into their name so jointly you are in a better tax position.
- The ISA allowance for 14/15 is £15,000. ISA’s are a tax efficient way to save, so ensure you and your spouse or civil partner have maximised your ISA savings this year.
- Pension contributions can keep you out of, or certainly reduce the amount of higher rate tax you pay. Speak to your financial adviser regarding making additional contributions in line with the annual allowances and your expected tax bill.
Read more: 3 ways to save tax in this tax year
What else can be done to save tax?
These points are just a number of options. There may also be opportunities with Capital Gains Tax, Inheritance Tax or more personal and business tax planning. Speak to your accountant and financial adviser who will be able to assess your individual circumstances.